Embrace the market, embrace the community, and let opportunities be fair on the chain

Humanity will not learn from history, but will only keep repeating history.

Author: Yuyue

This article was first written on December 15, 2023. Since there was no time to completely sort out the ideas at that time, it was only circulated and shared among a few friends in a small number.

Two months have passed now, and the opinions in some articles have been verified from the return on investment and the actual market situation. It has also been observed that many VC friends had confusion about meme during the consensus period. Many people understand meme, and many people understand VC, but I am afraid that few people understand both meme and what VC is doing as I do, so I simply sorted out and updated it and posted it to share it publicly. Some logical lines in the article are not completely clear, but I also want to find people in the same vein to communicate and make more progress.

Introduction: Humans will not learn from history, but will only keep repeating history.

It is long and suitable for people including degen, institutional practitioners and various groups of people interested in the meme asset craze caused by AI Agents and related infrastructure projects. It discusses thoughts on industry paradigms and prospects for the AI + crypto industry.

1. On-chain narrative changes brought about by AI Agents and related infrastructure projects

Currently, successful AI Agents and related infrastructure projects on the market will be more like VC coins that the mainstream market voices opposed in the past. However, at present, successful investors are actually secondary investors in the free market. They should use primary market thinking to invest in projects; and from the perspective of outcome theory, using this thinking and behavior model to buy AI Agents and AI Frameworks will have a higher winning rate and a greater probability of getting results.

VC coins may not be really bad, but compared with meme, such highly valued assets have the following problems for secondary investors:

• High degree of information asymmetry and cost disadvantage, and cost gaps of several times or even dozens of times often exist;

• Some project parties do not actively make market (pulling and protecting) due to compliance reasons, resulting in the unlocked low-cost chips being sold unilaterally in the secondary market. Therefore, price performance has been declining all the way, and there is no secondary opportunity.

Therefore, based on the chip structure, when the narrative is reliable and has in-circle voice, the opportunities for VC coins only exist in two situations:

1. Fully circulated old coins, such as $S, are the new chain of the original $FTM currency exchange;

2. There are no unlocked new coins, such as $IP,$BERA, and $KAITO are typical new coin markets.

Let’s go back to the meme asset craze triggered by AI Agents and related infrastructure projects. meme is an asset innovation, a form of fundraising, and an ICO in the new era.

It is clear that these assets have the following advantages for the largest liquidity and participants in the market (secondary investors):

• Information symmetry and cost advantages. Individual investors and secondary investors can obtain information through on-chain data, and have the opportunity to obtain low-priced chips at fair and low cost;

• The chip structure is fully circulated from the beginning, and there are also roles such as market makers and KOL. Since there are no compliance supervision issues in the chain, some active market makers have opportunities to participate.

2. Important reasons for the shift of voice power

The issue of assets and chips determines a major reason for this shift of voice. In VC projects, most VCs do not have the ability to help the project build a community, and most of them do not have the ability to consume/be worthy of their own “selling orders.” Therefore, in the vast majority of cases, people with low-cost chips become pure sellers after TGE and cannot make enough contributions to the project. The team obviously plays the primary role in the entire project, and other participants should, in the best case, make the project bigger and stronger until greater liquidity is introduced, thereby changing from PVP to PVE.

As for the entry point for organizations to choose projects, I would like to give a typical successful case as a primer. Pima @LeePima mentioned in a tweet: We hardly participate in any anonymous projects, especially those that require technology promotion (MEME doesn’t matter), and I would be very happy to see Team take 5-20% chips (if you don’t take it, I’m really worried).& rdquo;

——In other words, a horse will basically only choose to buy it. He believes that the team is more legit, and may be more concerned about technology, that is, whether the team is actually doing this. This is a potentially good example. When teams that focus on raising assets on the chain have flexibility when they get a lot of chips and VC projects have little flexibility, investors also have greater flexibility. Degree, here achieves a relative balance possibility. For degen players, this is actually different from the perspective we used to play pure meme.

From the perspective of my evaluation of the project, I will evaluate four aspects of the project, namely:

• Narration: The city dream rate is the first thing and must be evaluated;

• Chip structure: With or without? Quantified shareholder structure ratio;

• Community or emotion: Very simple, how many people are discussing this matter, how many groups are discussing this matter, and whether the consensus within the community is strong;

• Product technology: Team background, technical strength, expansion is the indicator on GitHub, academic strength;

This was partially mentioned in my previous interview spaces with @okxchinese and @Mercy_okx. Here is a more detailed and systematic supplement:

https://www.gushiio.com/i/spaces/1mrGmMrYnWdGy

In the past, when we played pure meme mindset, I think it was:

Narrative Chip Structure ~ Community or Emotional Product Technology

• Narration is the primary nature;

• In the pure meme emotional market, the chip structure largely determines price performance. The vast majority of the price performance is manipulated by the project party or the team. Price performance affects community and market sentiment, and community and market sentiment, so the two are basically equivalent;

• Product technology is the most important thing, and it is possible without technology. The team background is often just an angle used to help build consensus. Even just celebrity attention can be used as an endorsement.

From the perspective of primary market investment projects and projects with products and teams:

Narrative product technology ~ chip structure community or emotion

How did this ranking come about:

• Narration is still primary, which is absolutely no problem;

• The status of product technology has been significantly improved, because if there is no actual dynamic and rapid product delivery, the market’s expectations for the project will quickly decrease, and attention will quickly shift to the new project. This is also a kind of volume (this will in turn have a higher impact on the team’s strength. Higher requirements, delivery must be more industrial, and there is no time for professors and PhDs to hone their swords for several years to issue papers);

• The chip structure problem. If the narrative and product technology are sexy, then with the current capital size of primary and secondary institutions, they can get the chips they want in the range of 10- 50M, but projects with control still have very strong advantages, which is also one of the biggest advantages of unregulated on-chain projects.

How did this narrative change occur? In essence, the audience and funding sources have changed, and the power to speak in the market has gradually shifted in a direction that a wider audience can understand.

Here I classify meme in two ways:

• The first type of meme is the type I mentioned before and the type I am best at. It is possible for audiences outside the circle to understand and there is cultural consensus;

• The second type of meme is the meme of institutional investors with larger capital volumes such as VC in the past, and there is a technical consensus.

A bit of background needs to be added here is that since VCs are commercial organizations that need to make profits, and their investments are essentially responsible for LPs, most of the time fund managers cannot convince their LPs to buy meme, until LPs discover that the meme market is so crazy. Only then did they start urging their invested funds to buy meme, which may be part of the driving factor behind the beginning of this year’s meme craze.

So why has the market meme’s voice shifted? This is because when market narratives come to narratives driven by technological innovation such as AI, it itself is actually the second classification of the latter mentioned earlier. Therefore, the market itself has shifted its mainstream popularity, gradually moving from the first category to the second category. Of course, I personally think that these two narratives will always rotate, and the right to speak will not always be in the hands of the former/latter. This is also determined by human beings ‘pursuit of freshness in the physiological structure.

So, what is the impact of this narrative shift and shift of discourse power? This is the third and fourth parts I want to talk about: change and enlightenment.

3. What changes have the industry brought about as a result, and are they positive?

I think this kind of change may bring positive changes to the industry. Previously,@cz_binance said meme has become strange, so isn’t it okay for us to play with products?:)

Starting this year’s round, the reason why many VC coins on cex have poor reputation in the community is relatively simple. This is because consensus is forcibly established by the reputation and endorsement of VC and exchanges, and there is no opportunity for retail investors to participate. So when the project was approved by the exchange, the currency price fell all the way, and opposition in the community was raging. This also has a lot to do with the weakening of the credibility of big KOLs such as VCs in this round. Gradually, community-based KOLs voices have received stronger positive feedback from the market. Therefore, meme, which equitably transmits opportunities to community participants, is highly sought after. This behavior itself is actually a fundraising model, and it requires higher control over the asset side and market verification during the fundraising process.

For start-up teams, the current meme or on-chain copy launch can also provide them with funds. It has rapid feedback from the market, can quickly verify whether their direction can be recognized by the market, and is more lightweight. Entrepreneurship is getting bigger and bigger.

And precisely because the market itself has higher requirements for team strength, ToC is much more difficult than ToVC, and delivery must be more industrial. It also allows everyone to understand that in fact, some entrepreneurial teams are cheating. In essence, they falsify many previous companies. If they do it for several years, they have forked other people’s fraudulent projects (even these fraudulent projects can still raise a lot of money, and lucky people can continue to smash the market and have a lot of liquidity).

In this way, the market will automatically survive the fittest and create a group of teams that can deliver products.

——Now suppose that if a project with meme (or on-chain copycat) and a project without coin-issuing are doing essentially the same thing, and at the same time, the first-and-a-half-chain market pricing of the former is, for example, 100M, and the latter’s primary market pricing is 500M, then will it be more cost-effective for a VC to directly purchase the former’s tokens or engage in OTC chips with the team and be able to exit more quickly and freely than investing in the latter? A16z is obviously a pioneer in participating in both cultural meme and technical meme, and a crab-eater.

Everyone should have their own answers to this question in mind.

Ideally, this change in the form of fundraising will force all participants in the market to change their perceptions, and will force all VCs to redefine their investment paradigm. There is actually a trend to understand meme, a form of asset issuance, and their practitioners can achieve better return performance in the market. And the key point is that many of the logics of on-chain projects are highly similar to those of the primary market in my opinion, and they are also similar in terms of return models:

——Half of the 100 miles live and half of the life is half dead, which just makes ends meet, and alpha rewards rely on critical hits.

4. Inspiration from primary market investment (including on-chain)

Finally, the original primary logic of meme was that the process of low-market-value buying itself seems to me to be very similar to primary investment. What are the changes and implications from the perspective of investors?:

If meme could quickly recruit a group of believers, communicators, and community members who could help the long-term development of the project, such as KOL, long-term preachers or supernodes such as LaserCat @BitCloutCat and Wizard@0xcryptowizard, then the lower limit of this meme would not be too bad.

For the current technology-driven market, it is better for investors to be able to make sure that this team can indeed deliver products when the market value is low. This is the area where original VC institutional investors are better at. Of course, in terms of reaction speed, degen still has strong advantages such as quick reaction, no need to wait, and diligence and no sleep.

To sum it up:

1 -Degen, who has no working experience, suggests that you can learn from the thinking of the regular army and improve your systematic thinking ability. When you see a new project, you can conduct systematic investment and research on the project can help you obtain a higher PnL;

2 -Institutional investors with experience need to respond faster and select high-quality projects from the market that can quickly iterate and understand the market and assets. When the entrepreneurial team is recruited, the VC will also be recruited. If high-quality projects cannot be quickly screened out, the purchase cost will be increased, the rate of return will be reduced, and the competitiveness of the industry will be reduced;

3 -The new round of fundraising in the Crypto market after ICO, IDO and other fundraising forms is meme. It needs to respect the objective laws of the development of the market and things and accept narrative changes. In fact, this will bring positive changes to the industry;

4-The narrative between cultural consensus meme and technical meme may continue to rotate continuously. (For example,$SPX has also had a good increase before)

5 – LONG ONCHAIN

Respect the market and the community; embrace the market and the community; let opportunities happen fairly on the chain.

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